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1.1 2004 by Prentice Hall

Management Information Systems 8/eManagement Information Systems 8/eChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

11

MANAGING THEMANAGING THE

DIGITAL FIRMDIGITAL FIRM

Chapter

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What is the role of information systems inWhat is the role of information systems in

todays competitive business environment?todays competitive business environment?

What exactly is an information system?What exactly is an information system?

What do managers need to know aboutWhat do managers need to know about

information systems?information systems?

How are information systems transformingHow are information systems transforming

organizations and management?organizations and management?


OBJECTIVES

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How has the Internet and Internet technologyHow has the Internet and Internet technology

transformed business?transformed business?

What are the major management challengesWhat are the major management challenges

to building and using information systems?to building and using information systems?


OBJECTIVES

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1. Design competitive and effective systems1. Design competitive and effective systems

2. Understand system requirements of2. Understand system requirements of

global business environmentglobal business environment

3.Create information architecture that3.Create information architecture that

supports organizations goalsupports organizations goal


MANAGEMENTCHALLENGES

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4. Determine business value of information4. Determine business value of information

systemssystems

5. Design systems people can control,5. Design systems people can control,

understand and use in a socially, ethicallyunderstand and use in a socially, ethically

responsible mannerresponsible manner


MANAGEMENTCHALLENGES

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The Competitive Business Environment and the Emerging Digital Firm

WHY INFORMATION SYSTEMS?

Four powerful worldwide changes thatFour powerful worldwide changes that

have altered the business environment:have altered the business environment:

1.1. Emergence of the Global EconomyEmergence of the Global Economy

2.2. Transformation ofIndustrial EconomiesTransformation ofIndustrial Economies

3.3. Transformation of the

Business

Enterprise

Transformation of the

Business

Enterprise

4.4. The Emerging Digital FirmThe Emerging Digital Firm

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Emergence of the Global EconomyEmergence of the Global Economy

Management and control in a globalManagement and control in a globalmarketplacemarketplace

Competition in world marketsCompetition in world markets

Global work groupsGlobal work groups

Global delivery systemsGlobal delivery systems


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Transformation ofIndustrial EconomiesTransformation ofIndustrial Economies

KnowledgeKnowledge-- and informationand information--basedbased

economieseconomies

ProductivityProductivity

New products and servicesNew products and services

Knowledge: a central productive andKnowledge: a central productive andstrategic assetstrategic asset


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Transformation ofIndustrial EconomiesTransformation ofIndustrial Economies

TimeTime--based competitionbased competition

Shorter product lifeShorter product life

Turbulent environmentTurbulent environment

Limited employee knowledge baseLimited employee knowledge base


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Figure 1-1

Labor Force Composition 1900-2000


0%

10%

20%

30%

40%

50%

60%

70%

1900 1910 1920 1930 1940 1950

Labor Force Composition 1900-2000

1960 1970 1980 1997 2000

Year

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Transformation of the Business EnterpriseTransformation of the Business Enterprise

FlatteningFlattening

DecentralizationDecentralization

FlexibilityFlexibility

Location independenceLocation independence

Low transaction and coordination costsLow transaction and coordination costs EmpowermentEmpowerment

Collaborative work and teamworkCollaborative work and teamwork


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Emergence of the Digital FirmEmergence of the Digital Firm

DigitallyDigitally--enabled relationships withenabled relationships withcustomers, suppliers, and employeescustomers, suppliers, and employees

Core business processes accomplishedCore business processes accomplishedvia digital networksvia digital networks

Digital management of key corporateDigital management of key corporateassetsassets

Rapid sensing and responding toRapid sensing and responding toenvironmental changesenvironmental changes


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4 MajorSystems Defining the Digital Firm4 MajorSystems Defining the Digital Firm

Supply chain management systemsSupply chain management systems

C

ustomer relationship managementC

ustomer relationship managementsystemssystems

Enterprise systemsEnterprise systems

Knowledge management systemsKnowledge management systems


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A set of interrelated components that collectA set of interrelated components that collect

(or retrieve), process, store, and distribute(or retrieve), process, store, and distribute

information to support decision making andinformation to support decision making andcontrol in an organizationcontrol in an organization


What Is an Information System?


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Data:Data: Streams of raw facts representingStreams of raw facts representingevents such as business transactionsevents such as business transactions

Information:Information: Clusters of facts that areClusters of facts that aremeaningful and useful to human beings inmeaningful and useful to human beings in

the processes such as making decisionsthe processes such as making decisions




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Figure 1-2

Data and Information



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INPUT OUTPUTPROCESS

FEEDBACK


Activities in an Information System


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Functions of anInformation

System


Figure 1-3

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Rely on computer hardware andRely on computer hardware and

softwaresoftware

Processing and disseminatingProcessing and disseminating

informationinformation


Computer-Based Information System (CBIS)


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Fixed definitions of data, proceduresFixed definitions of data, procedures

Collecting, storing, processing,Collecting, storing, processing,

disseminating, using datadisseminating, using data


Formal Systems


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An organizational and managementAn organizational and management

solution based on informationsolution based on information

technology to a challenge posed by thetechnology to a challenge posed by the

environmentenvironment

An important instrument for creatingAn important instrument for creating

value for the organizationvalue for the organization

S

tages in the business informationS

tages in the business informationvalue chain add value to informationvalue chain add value to information


A Business Perspective on Information Systems


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Business Processes

Information Processing Activities

Business Value

Management Activities

SupplyChainManagement

EnterpriseManagement

CustomerManagement

KnowledgeManagement

DataCollectionandStorage

TransformationIntoBusinessSystems

Dissemination

Planning Coordinating Controlling Modeling andDecision Making

FirmProfitability

and

StrategicPosition

Figure 1-4


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Information Systems

ORGANIZATIONSORGANIZATIONS TECHNOLOGYTECHNOLOGY

MANAGEMENTMANAGEMENT

INFORMATIONINFORMATION

SYSTEMSSYSTEMS

Figure 1-5


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Information systems literacy:Information systems literacy: BroadBroad--based understanding of information systemsbased understanding of information systemsthat includes behavioral knowledge aboutthat includes behavioral knowledge about

organizations and individuals usingorganizations and individuals usinginformation systems and technicalinformation systems and technicalknowledge about computers.knowledge about computers.

Computer literacy:Computer literacy: Knowledge aboutKnowledge about

information technology, focusing oninformation technology, focusing onunderstanding how computerunderstanding how computer--basedbasedtechnologies worktechnologies work


A Business Perspective on Information Systems


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Sales and marketingSales and marketing

ManufacturingManufacturing

FinanceFinance

AccountingAccounting

Human resourcesHuman resources


MajorBusiness Functions


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Key Elements:Key Elements:

People:People: Managers, knowledge workers,Managers, knowledge workers,

data workers, production or servicedata workers, production or serviceworkersworkers

Structure:Structure: Organization chart , groups ofOrganization chart , groups of

specialists, products, geographyspecialists, products, geography


Organizations


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Operating procedures:Operating procedures: Standard operatingStandard operatingprocedures (SOP, rules for action)procedures (SOP, rules for action)

Politics:Politics: Power to persuade, get things donePower to persuade, get things done

Culture:Culture: Customs of behaviorCustoms of behavior


Organizations


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Levels:Levels:

Senior managers:Senior managers: make longmake long--rangerangestrategic decisions about products andstrategic decisions about products andservicesservices

Middle managers:Middle managers: Carry out the programsCarry out the programsand plans of senior managementand plans of senior management

Operational managers:Operational managers: monitor the firmsmonitor the firmsdaily activitiesdaily activities


Management


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Tools managers use to cope with changeTools managers use to cope with change

Hardware:Hardware: Physical equipmentPhysical equipment

Software:Software: Detailed preprogrammedDetailed preprogrammedinstructionsinstructions

Storage:Storage: Physical media forPhysical media forstoring data and the softwarestoring data and the software


ComputerTechnology


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Communications Technology:Communications Technology:transfers data from one physical locationtransfers data from one physical location

to anotherto another

Networks:Networks: link computers to share datalink computers to share dataor resourcesor resources


ComputerTechnology


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CONTEMPORARY APPROACHESTOINFORMATION SYSTEMS

Figure 1-6

Technical

Approaches

BehavioralApproaches

Management

Science

Operations

Research

Sociology

Economics

Computer

Science

Psychology

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Optimize systems performance:Optimize systems performance:

Technology and organizationTechnology and organization

Organizations mutually adjust to oneOrganizations mutually adjust to oneanother until fit is satisfactoryanother until fit is satisfactory


Socio-Technical Systems


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SOURCE: Liker, et al, 1987

Figure1-

7

Socio-technical Systems


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TOWARD THE DIGITAL FIRM

The Interdependence Between Organizations and Information Systems

Figure 1-8

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1950s:1950s: Technical changesTechnical changes

1960

s1960

s--70

s:70

s: Managerial controlsManagerial controls

1980s1980s--90s:90s: Institutional core activitiesInstitutional core activities

Today:Today: Digital information websDigital information webs

extending beyond the enterpriseextending beyond the enterprise



The Widening Scope ofInformation Systems

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Figure1-

9


The Widening Scope ofInformation Systems

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International network of networksInternational network of networks

Universal technology platform: AnyUniversal technology platform: Any

computer can communicate with any othercomputer can communicate with any other

computercomputer

World Wide Web and Web sitesWorld Wide Web and Web sites



The Internet

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Communicate and collaborateCommunicate and collaborate

Access informationAccess information

Participate in discussionsParticipate in discussions

Supply informationSupply information

Find entertainmentFind entertainment

Exchange business transactionsExchange business transactions



What You Can Do on the Internet?

f i S 8/f i S 8/f i S 8/f i S 8/

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Flattening organizationsFlattening organizations

Separating work from locationSeparating work from location

Reorganizing workReorganizing work--flowsflows

Increasing flexibilityIncreasing flexibility

Redefining organizational boundariesRedefining organizational boundaries



New Options forOrganizational Design

M I f i S 8/M I f i S 8/M I f i S 8/M I f i S 8/

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Figure 1-10


Flattening Organizations & Information Systems

M t I f ti S t 8/M t I f ti S t 8/M t I f ti S t 8/M t I f ti S t 8/

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Figure 1-11

Redesigned Work Flow ForInsurance Underwriting



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Electronic commerceElectronic commerce

Electronic businessElectronic business

Digital market: Information systems links,Digital market: Information systems links,

buyers and sellers to exchangebuyers and sellers to exchange

information, products, services, paymentsinformation, products, services, payments



The Digital Firm


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Customers On-line marketing On-line sales Built-to-orderproducts Customerservice Salesforce automation

Suppliers Procurement Supply chain management

Businesspartners Joint design Outsourcing

Remote offices and work groups Communicate plans and policies Group collaboration Electronic communication S

cheduling

Factories Just-in-time production Continuous inventory

replenishment Production planning

ELECTRONIC BUSINESS

Electronic Commerce

THE EMERGING DIGITAL FIRM

Figure 1-12


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Internet links buyers, sellersInternet links buyers, sellers

Lower transaction costsLower transaction costs

Goods and services advertised, bought,Goods and services advertised, bought,exchanged worldwideexchanged worldwide

BusinessBusiness--toto--business transactionsbusiness transactionsincreasingincreasing



Electronic Commerce

Management Information Systems 8/eManagement Information Systems 8/eManagement Information Systems 8/eManagement Information Systems 8/e

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Electronic Business:Electronic Business: Executing all theExecuting all thefirms business processes with Internetfirms business processes with Internettechnologytechnology

Intranet:Intranet: Business builds private, secureBusiness builds private, securenetwork based on Internet technologynetwork based on Internet technology

Extranet:Extranet: Extension of intranet toExtension of intranet toauthorized external usersauthorized external users


Electronic Business


Management Information Systems 8/eManagement Information Systems 8/eManagement Information Systems 8/eManagement Information Systems 8/e

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Information Architecture and Information Technology Infrastructure


Figure 1-13

Management Information Systems 8/eManagement Information Systems 8/e

11Ch

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1 47 2004 b P ti H ll

Management Information Systems 8/eManagement Information Systems 8/eChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm11

MANAGING THEMANAGING THE

DIGITAL FIRMDIGITAL FIRM

Chapter

mis8ch01

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